Re: What is microfinance?

Description: Yunus offered himself as a guarantor for poor villagers who borrowed small amounts of money from banks.

Question: When did microfinance spark your interest?

Transcript: Well I had no idea that I would ever get involved in anything about lending or microfinance. At that time that word didn’t exist, so the idea of having such a program didn’t come to my mind. I was teaching at Chittagong University in Bangladesh at a time when our country was going through a big famine. Lots of people were dying of hunger. So I was kind of feeling terrible that I teach something beautiful, some economic elegant theories, but it doesn’t come to any use for people. So I wanted to see if I could do something directly as a person – to individual person, human being right next door to the university campus, adjacent to the university campus. So I was doing some little things to help people, and I saw how many lenders are operating in the village and made a list of those people who borrowed from lenders. There are 42 names on my list. The total money they borrowed was $27. So I thought I can solve this problem; help them get out of the clutches of the money lenders by lending this money to 42 people, this $27. They can return the money to the money lenders and they will be free. And that’s what I did and they were pretty excited about it, so I wanted to continue it. I went to the banks who do the lending to the poor people. They refused. So ultimately I offered myself as a guarantor to the banks so that they will allow them to get the money. So that’s how it began, and it continued and we’ve been successful.

Recorded on: 1/23/08